Market Update

Q2 2010

2010 started well in Asia. The asset price increases referred to in our Q4 2009 update have been sustained and employment growth has continued. Singapore's unemployment rate has eased to just over 2%.

Singapore is an export led economy, and as such, the health of its major trading partners is vital to its success. Intra Asian trade remains robust. Continuing growth in China is a big contributor to this. Having said that, the US and Europe also seem to have stabilised. The economy as a whole is doing well and is clearly in the upper range of our Q4 2009 expectations.

As ever, Singapore is really a tale of two (albeit closely interrelated) economies. On the one hand, it is a small open economy of 5 million people. This "economy" is all about trade. This in turn is influenced by the health of the global trading environment. This aspect of Singapore's economy was seriously affected by last year's downturn and is now coming back.

On the other hand, Singapore also plays a role as a regional hub for industries of all types. Almost all major multinationals will either have a SEA or an APAC headquarters here. Employment in this high skill / high salary "sector" is directly driven by the health of China, India and so forth and is largely divorced from the local economy.

This phenomenon is even more apparent in banking where Singapore has been extremely successful in positioning itself as both THE Asia Wealth Management hub and also as a truly global centre for many back and middle office banking activities.

The good news at the moment is that all of these sectors are doing well simultaneously.

Let's look at 2 areas more specifically.

Non Banking executive recruitment
(principally MNCs but also local companies)

Banking

Non Banking Executive Recruitment

The rebound in this "sector", alluded to in our Q4 2009 report, has continued. Virtually all industries are now back in "hiring mode".

In many companies the "normal" level of recruitment was synthetically depressed by blanket hiring freezes. Now that these have been lifted, a strong correction is occurring.

As ever, demand is strongest for commercially astute, solutions oriented professionals ideally with a combination of "East" and "West" experience.

Investment Banks are increasing recruitment activities. Transaction and Securities Services businesses have also seen an up-tick in activity in Q1. Private Banks are still expanding particularly in the front office space.

Generally, we are currently seeing compensation increment ranges from 5% - 15% but we are expecting an upward trend going forward as banks have started to recruit to attract top talent.

For critical hires, some banks have started to pay sign-on bonuses or compensation in-lieu (e.g. for shares, stock options).

Due to increasing recruitment activities expected to continue in 2010, banks are facing challenges in retaining talent. To do so they are extending healthier increments and/or bonus pay outs, and are providing clearer career development for top talent).

Trends

Recruitment activity will continue to increase in 2010

Turning from "employer market" to "employee market"

Increments (moving across banks) on the rise (currently we are seeing 5% - 15% but this may continue to rise)

More focus on talent retention – immediate approach is via healthier increment and/or bonus, and long term solution is through talent development / career progression (we are seeing more demand for talent / leadership development professionals currently)

In summary, executive recruitment has rebounded quite strongly in 2010. We are expecting demand for quality professionals to remain strong. Having said that, this demand is ultimately predicated on the major global economies being able to sustain their recoveries as fiscal stimulation is wound back.